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This article is about FOSFA arbitration under the Rules of Arbitration for Brokerage Commission and Interest (“Brokerage rules). You can read about the standard FOSFA arbitration rules here.
The rules are designed for brokers in case of non-payment of commission. Usually, these are simple disputes that do not involve a lot of evidence, complex legal issues, and oral hearings.
The primary purpose of the rules is to make the collection of brokerage commissions a simple, fast and cheap process.
Main differences
The main differences between standard and brokerage FOSFA rules are as follows:
| Rules of Arbitration and Appeal | Rules of Arbitration for Brokerage Commission and Interest | |
|---|---|---|
| Time limit | 1 year | 60 days |
| Time limit for filing claim submission | Not set | Together with the arbitration notice |
| Time limit for filing defence | Not set | 30 days |
| Arbitrators | 3 | 1 |
| Time limit for payment of the arbitration fee | 30 days | 7 days |
| Appeal | In FOSFA or the High Court | The right to appeal is excluded |
| Standard deposit amount | £10,000 | £125 for the appointment of an arbitrator + arbitrator’s fee at their discretion |
There are some simplifications in the table for clarity. When working with arbitration, one should always look at the full text of the rules.
It is important to remember that under the Brokerage rules, the limitation period is only 60 days from the date of the dispute. FOSFA 95, a proforma designed for brokers, states that a dispute arises if the commission is not paid on time.
Late commencement of arbitration can lead to loss of the claim. However, the arbitrator has the right to extend the limitation period at their discretion.
In order to file a claim under the Brokerage rules, the agreement must contain an arbitration clause referring to the rules. Alternatively, one can refer to the proforma FOSFA 95.
Arbitration clause
Here is an example of the arbitration clause:
This contract shall be deemed to have been made in England and the construction, validity and performance thereof shall be governed in all respects by English Law. Any dispute arising out of this contract, including any question of law arising in connection therewith, shall be referred to arbitration in London in accordance with the Rules of Arbitration for Brokerage Commission and Interest of the Federation of Oils, Seeds and Fats Associations Limited, in force at the date of this contract and of which both parties hereto shall be deemed to be cognizant.
A detailed clause helps to avoid disputes over the applicable law and jurisdiction of the arbitrator. This may be particularly important in cases where the award is not to be enforced in England.
FOSFA 95
FOSFA 95 is the Federation’s proforma for contracts between broker and client. However, the pro-forma refers not to the Brokerage but to standard arbitration rules, with some modifications:
- the dispute is heard by a single arbitrator
- the decision of the single arbitrator is final and not subject to appeal
As a result, arbitration becomes somewhat similar to the Brokerage rules. One can refer to arbitration under FOSFA 95 as follows:
Law/Arbitration: as per FOSFA 95
One can also incorporate the proforma into the contract:
All other terms, including arbitration, as per FOSFA 95
These methods of incorporating an arbitration clause should be treated with caution. In some countries, reference to another document is considered insufficient for the validity of an arbitration agreement. In this case, the arbitral award may become unenforceable.
If you work with FOSFA contracts and want to assess risks in advance, challenge a decision, or protect yourself from procedural mistakes, reach out to me via email, Telegram, or WhatsApp.
